Can woman sue for mental anguish after oil company destroys her house? Michigan Supreme Court to decide

Megan Cavanagh, an attorney for High Pointe Oil Co., makes arguments to justices on Thursday in the Michigan Supreme Court. Her client wants the court to overturn $100,000 in mental-anguish damages a jury awarded to a DeWitt woman whose home was destroyed when High Pointe accidentally dumped nearly 400 gallons of fuel oil into the basement.David Eggert | MLive.com

LANSING, MI - The case of a Lansing-area woman whose home was destroyed when a company mistakenly pumped nearly 400 gallons of fuel oil into her basement could have implications across Michigan.

The legal issue: Can people sue for mental anguish when their house is damaged or even made uninhabitable by another's negligence?

The state Supreme Court on Thursday heard arguments on the question, an apparently new one in Michigan's appellate courts and one that has prompted business interests to weigh in.

Beckie Price, sued High Point Oil Co. in 2008, about nine months after its driver inadvertently delivered fuel oil to her DeWitt home north of Lansing. He showed up despite her cancelling her service after replacing her oil furnace with a propane furnace in 2006.

Price, 56, received about $260,000 from her insurer and High Pointe's insurer for "economic" damages such as property loss, soil remediation, construction of a new house, rent payments and household items.

She also was awarded $100,000 by a Clinton County jury for "noneconomic" damages after testifying that she felt a great sense of loss over the destruction of her home, was embarrassed to move back in with her parents, suffered from stress and had to take an antidepressant for several months.

The Court of Appeals affirmed the judgment, rejecting the oil company's argument that she was fully compensated by receiving the difference in market value of her house before and after the damage. The three-judge panel also decided against following earlier rulings that barred damages for emotional suffering for destruction of people's belongings, saying losing one's home - "real property" - is different.

"A home’s unique and particular value has been acknowledged by our Supreme Court, and damage to or destruction of one’s home or land would, in most cases, produce emotional suffering," the appeals court said in August 2011.

High Pointe appealed to the high court, and the case led groups representing home builders, realtors and manufacturers to urge justices to overturn the $100,000 judgement for Price.

During Thursday's oral arguments, justices grappled with where to draw the line, sympathizing with Price's plight but also wondering about the ramifications of the Court of Appeals decision.

Price's lawyer Stephen Sinas urged the justices to "recognize the commonsense reality impact on people's lives who are fully displaced from their home." He said her case is the most extreme example of why homeowners should be able to recover some damages for emotional distress.

Overturning the $100,000 judgment would be "unjust," he said.

Some justices, however, asked why they should allow the verdict when they could find no previous decisions in the past 170 years supporting how the appeals court ruled.

"Why have good judges and good justices over years in Michigan and a majority of other states tolerated such a legal regime?" asked Justice Stephen Markman.

In a brief submitted to the Supreme Court, the Michigan Manufacturers Association warned of frivolous lawsuits if the Court of Appeals decision stands.

"This sharp change in jurisprudence would turn Michigan's litigation atmosphere on its head and certainly disrupt the slowly burgeoning economic recovery of its economy," the group wrote.

Sinas told justices they could rule narrowly, though, by letting homeowners sue when damage "completely disrupts" their daily life but not for minor damage that is not out of the ordinary.

Chief Justice Robert Young questioned the distinction between someone's house and a longtime family business. And Justice Mary Beth Kelly wondered if justices could allow noneconomic damages if someone's house is completely lost but not if the homeowner temporarily loses use of the home.

The court is expected to rule by the end of July. Justice Michael Cavanagh recused himself from hearing the arguments because High Pointe's attorney, Megan Cavanagh, is his daughter.

Megan Cavanagh said Michigan has not allowed people to sue for mental anguish when they are victims of negligence, not an intentional act. While she said mental injuries are subjective and tough to evaluate, Young said judges and juries do it every day in other areas of the law.

"Why should or shouldn’t we do so now?" he asked.

The case is Price v. High Point Oil Co. Read all the court briefs here.